Farm support

Details of a nationally-funded loan scheme for CAP Basic Payment 2016 to provide cash flow and stimulus into the rural economy have been unveiled.

The new loan scheme will provide certainty for farmers and crofters over winter 2016 and seek to inject up to £300 million into the rural economy, safeguarding jobs and local agricultural businesses.

Farmers and crofters will be able to apply for a loan of 80% of their CAP Basic Payment and Greening 2016 entitlement, up to a maximum of €150,000 and receive their loan payments in November.

Announcing the scheme during a statement to parliament, Cabinet Secretary for Rural Economy and Connectivity Fergus Ewing said:

"I am confident that we are putting the 2016 payments on a better footing. I am also reassured that the arrangements we have put in place with our IT contractor mean that they should be able to deliver on the timescale they have committed to for payments. But those arrangements are not risk free and frankly, these are not risks I am prepared to take, particularly with families and communities' livelihoods.

"Having learned lessons from the 2015 round of CAP payments, I am determined to provide as much certainty as we can, not just for farmers and crofters, but for the wider economy in our rural communities.

"I am therefore announcing today, that farmers will not have to wait until 2017 to receive payment of their CAP entitlement. Letters will be issued before the end of the month to farmers inviting them to apply. Every eligible applicant who applies by the deadline of 12 October will receive a loan of 80% of their entitlement in November.

"Our estimates suggest that over 17,000 businesses will be entitled to qualify for this loan initially, with work continuing to make offers and payment to the remaining eligible businesses by the end of the year. I would therefore encourage all of them to apply for this funding. It will give them the security and certainty they need to enable them to plan for the year ahead while driving forward the rural economy."

Notes to editors

Under this nationally-funded Scottish Government scheme any farmer and crofter who is eligible for a payment will receive a letter and be able to apply for a loan.

The loan scheme has been designed such that the applicant's Basic and Greening payment should be more than the Loan scheme sum paid to them. At the point of the CAP 2016 payment being made, we will therefore deduct the sum and pay the remainder of their Basic and Greening payment in to their bank account. The sum paid will be interest free to the applicant, although we will record the notional interest as a de minimis state aid.

It is the responsibility of each farmer/crofter to keep a record of all state aid to their farm business under all schemes.

Figures are based on current £/€ exchange rates and are subject to change. Final figures will depend on the official CAP exchange rate which the European Commission will confirm at the end of September.

Loans will be paid in the currency which the farmer opted for on their Single Application Form – Sterling or euros.